Dive Brief:

• Capriotti's Sandwich Shop completed an acquisition of Wing Zone, a fast casual chicken wing brand, according to a press release on Monday.
• Capriotti's will leverage its experience in franchising, operations and technology with Wing Zone's off-premise operations to help grow both brands, Ashley Morris, CEO of Capriotti's, said in the press release. Morris has also become the CEO of Wing Zone with this acquisition.
• Combined, the two companies generated over $100 million in systemwide sales during 2020 and have more than 150 stores. Capriotti's is primed for additional growth with 210 stores in development and over 30 expected to open this year.

Dive Insight:

Capriotti's acquisition of Wing Zone could help enhance the sandwich chain's growing off-premise channel, especially if it can leverage Wing Zone's direct delivery experience. The channel makes up 75% of Wing Zone's delivery orders compared to third-party partnerships. Wing Zone was well prepared for the pandemic with only about 10% of its sales coming from dine-in traffic and didn't have to lay off or furlough employees during the height of the pandemic in spring, Wing Zone’s former CEO Matt Friedman previously told Restaurant Dive. The company also has been actively hiring delivery drivers. 

Capriotti's grew its off-premise channels in 2020 to include virtual brands that serve versions of classic subs through delivery providers Grubhub, Postmates and DoorDash, according to the press release. It also opened its first corporate ghost kitchens in Los Angeles and Pasadena, California, and introduced its ghost kitchen franchise opportunity with locations open or in development in several cities including Columbus, Ohio; Baltimore; Philadelphia; Austin, Texas; and Miami. It also partnered with Reef Kitchens to open its first ghost kitchen, which it calls vessels, in Baltimore. 

With its delivery-centric model, Wing Zone could likely translate to a ghost kitchen model easily. Many chains, including Brinker International, have already had a lot of success in developing virtual-only wing brands to help generate sales. The addition of Wing Zone's direct delivery expertise could help Capriotti's configure its off-premise channels to incorporate more self-delivery, reducing costs over time as well.

While the pandemic has led to restaurant closures and bankruptcies, those brands with strong off-premise channels are generating more attention from investors and restaurants alike, analysts have told Restaurant Dive. Closures are also reducing the oversupply of restaurants, which is expected to result in strong same-store sales growth among chains and restaurants that survive into the post-pandemic period, Josh Benn, managing director and global head of restaurant, food and consumer corporate finance at Duff & Phelps, previously told Restaurant Dive.